New Jersey Made Incorrect Medicaid Electronic Health Record Incentive Payments

The New Jersey Department of Human Services (State agency) did not always pay electronic health record (EHR) incentive payments in accordance with Federal and State requirements. The State agency made incorrect EHR incentive payments to 15 hospitals totaling $2.5 million. Specifically, the State agency overpaid 10 hospitals a total of $2.4 million and underpaid 5 hospitals a total of $137,000 for a net overpayment of almost $2.3 million. Because the incentive payment is calculated once and then paid out over 3 years, payments made after September 30, 2013, will also be incorrect. The adjustments to these payments total $514,000. Additionally, the State agency did not report one professional incentive payment to the National Level Repository (NLR). The State agency correctly paid the five professional groups we reviewed.

The Health Information Technology for Economic and Clinical Health Act, enacted as part of the American Recovery and Reinvestment Act of 2009, established Medicare and Medicaid EHR incentive programs to promote the adoption of EHRs. As an incentive for using EHRs, the Federal Government is making payments to providers that attest to the "meaningful use" of EHRs. The State agency made $118.6 million in Medicaid EHR incentive payments from February 1, 2012, through September 30, 2013.

We recommended that the State agency (1) refund to the Federal government the almost $2.3 million in net overpayments made to the 15 hospitals; (2) adjust the 15 hospitals' remaining incentive payments to account for the incorrect calculations (which will result in future cost savings of $514,000); (3) review the calculations for the hospitals not included in the 33 we reviewed to determine whether payment adjustments are needed, and refund any overpayments identified; and (4) work with CMS to ensure that the 1 unreported professional incentive payment is reported to the NLR.

In written comments on our draft report, the State agency concurred with our findings and recommendations.